The current housing market has put the American Dream of buying a home more and more out of reach for many Americans. Additionally, more Americans than ever are choosing to become forever-renters rather than purchase a home of their own. With this trend in mind, here are a couple of recent stories on the rental market that may spark a story idea in your local market.
Rents are decreasing – primarily for the wealthy
An article in The Wall Street Journal this month noted that new housing construction was driving down the rental prices in some of the largest cities, but primarily for the top of the market rather than lower- or middle-tier apartments. With new construction in some of the fastest-growing cities, including Austin, Charlotte, Salt Lake City and Phoenix, the supply of rental units is finally beginning to catch up with demand and driving down prices. However, the Journal noted that “the biggest discounts are reserved for the most lavish accommodations” as “relatively little of new rental supply targets lower tiers of the market, so those renters are less likely to be on the receiving end of price cuts.”
According to a report by Harvard University’s Joint Center for Housing Studies, half of renters today spend more than 30% of their income on rent -– a number that has been rising steadily over the past two decades. The dwindling supply of low-rent units, which coincided with the rapid increase in asking rents during the pandemic, is cited as one of the reasons more renters are struggling to find affordable housing.
Adding rent payments to credit scores
Renters who do aim to purchase a home can find themselves at a disadvantage to previous homeowners when it comes to credit history. Despite making on-time monthly housing payments, renters traditionally do not see their rental payments reflected in credit scores. This is slowly beginning to change as more services and policymakers are aiming to reduce disparities in homeownership.
Articles in the New York Times and Forbes highlight how incorporating rent payments into credit scores can transform a person’s financial trajectory. A Fannie Mae pilot program in 2022 found that over half of the participants saw an increase in their credit score, while a TransUnion study found that incorporating rent payments can lead to an average credit score increase of 60 points. Reporting credit scores can be good for landlords as it has been shown to encourage residents to pay rent on time. However, it may also make renting for low-income individuals even more difficult.
Even though “the general industry approach so far is to give renters a choice about whether to have their payments regularly reported, and to report only on-time payments” the reporting of negative information could impact tenants that already struggle to make ends meet or may want to withhold rent as a way to force landlords to make repairs. A recent article highlighted that exact process happening. The report noted that as tenant protections became stronger in New York City, “landlords got a little desperate and were looking for new ways to basically pressure or harass tenants to make them pay rent.” Reporting credit is an effective way of doing that, which may also make it harder for those tenants to rent in the future.
